Extended limitation fails when revenue already knew the facts and no suppression or intent to evade duty is proved.

Where the Department had prior knowledge of the relevant manufacturing activity and remained uncertain for a substantial period about the person liable, the extended limitation period could not be invoked. The record showed earlier notices and departmental communications, and no suppression, fraud, wilful misstatement, or intent to evade duty was established. On that basis, the duty demand was time-barred and the consequential penalties could not survive.

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Issues: Whether the demand of duty was barred by limitation under the extended period and whether the penalties could survive when the Department had prior knowledge of the facts and no suppression or wilful misstatement was established.

Analysis: The correspondence between the assessee and the Department showed that the Department was aware of the activity and was uncertain for a substantial period about the person liable as manufacturer. The earlier notice issued to the other party, the later departmental communications, and the delay in issuing the impugned notice indicated that the facts were known to the Revenue from an early stage. In the absence of suppression, fraud, misstatement, or contravention with intent to evade duty, the extended period under the limitation provision could not be invoked. Since the demand itself was hit by limitation, the penalties imposed on both appellants also could not stand.

Conclusion: The demand was barred by limitation and the penalties were unsustainable.

Ratio Decidendi: Where the Department had knowledge of the relevant facts and no suppression or wilful misstatement with intent to evade duty was proved, the extended period of limitation cannot be invoked and consequential penalties fail.

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